Boeing board forces out CEO over affair

WASHINGTON—The Boeing Co. announced Monday that it had forced president and chief executive officer Harry Stonecipher to resign after he admitted having an affair with a female company executive. The move ended his 15-month tenure the same way it began: under a cloud of scandal.

Boeing officials didn't name the woman with whom Stonecipher, 68, admitted to beginning a consensual affair in January that lasted several weeks. They said only that she was a longtime Boeing employee who's still on the job.

Stonecipher is married. He has two children and two grandchildren.

Succeeding him as interim president and CEO is Chief Financial Officer James Bell, 56, a 32-year Boeing veteran who won't be a candidate to become the Chicago-based plane maker's permanent chief.

Stonecipher took over Boeing in December 2003 after then-president and CEO Phil Condit resigned under the pressure of a scandal involving the proposed sale of Boeing 767s for use as Air Force tankers. The episode, in which a Boeing official admitted to illegal job talks with an Air Force procurement specialist overseeing the tanker deal, eventually landed two Boeing executives in prison. They were Boeing's then-chief financial officer, Mike Sears, and Darleen Druyun, the Air Force procurement official later hired by Boeing.

Stonecipher, a blunt-talking aerospace veteran, set out to shore up Boeing's flagging commercial jet sales and to repair its reputation with the Pentagon. Its reputation had been battered by the 767 scandal, which has put Air Force tanker plans on hold, and the Pentagon's suspension of Boeing's rocket-launch program after the company was caught with confidential documents from Lockheed Martin, a competitor.

To some extent, Stonecipher succeeded. The company's new 787 jet, due in 2008, is off to a promising start, and the Air Force lifted the rocket ban on Friday. While tanker probes continue, fallout so far seems contained to Sears and Druyun, and Boeing is considered the favorite in any new tanker competition.

Stonecipher made adherence to the company's conduct code a centerpiece of Boeing's comeback. After Sears was sentenced last month for his role in improperly hiring Druyun, Stonecipher wrote to company employees: "When a Boeing person, especially a senior leader, chooses to disregard either government laws or company policies, there are tremendous personal and legal consequences."

That stance may have contributed to Stonecipher's downfall, said Cai Von Rumohr, an aerospace analyst with SG Cowen, a Boston consulting firm.

Because ethics were already a concern at Boeing, he said, "the CEO had to be a level above everyone else."

"Sex and CEOs are not strangers to each other," said Richard Aboulafia, an aerospace analyst with the Teal Group in Fairfax, Va. "In another age, in another time, he would have had some leeway."

In a news conference announcing Stonecipher's Sunday resignation, Boeing Chairman Lewis Platt said the affair would have "impaired his ability to lead the company going forward."

Platt said the situation came to light after an anonymous tip from an employee who "got hold of some correspondence" between Stonecipher and the woman. An internal investigation followed.

The company hasn't announced a timeline for a new chief, but Platt said Boeing had been considering successors for Stonecipher even before the scandal.

Stonecipher had already declared his intention to retire next year when he turned 70.